Biz Buzz: Rethinking Belle

It was the classic case of the child outshining the parent. As Belle Corp. moved to transfer its gaming assets to subsidiary Sinophil Corp., shares of the latter sizzled as the market priced in its transformation into a gaming holding firm comparable to Melco Crown (Philippines) Resorts Corp. On the other hand, interest on parent firm Belle waned.

But some market analysts say the dumping of Belle shares in the aftermath of the Sinophil announcement may have been overdone. Apart from continuing to incur lease rental revenue from the casino while still benefiting from Sinophil’s gaming operations, these Belle followers say that the consolidation of gaming assets into Sinophil should bode well for Belle as this will make it easier to value the group’s gaming interest.

Melco Crown, with a market capitalization of about P60.55 billion, is now valued at roughly half of Bloomberry’s P119 billion. In theory, analysts say Sinophil’s market capitalization (currently at only P8.38 billion) should be close to Melco Crown’s as each owns half of the gaming operations of the upcoming City of Dreams Manila. But Sinophil remains largely illiquid. The solution? Buy Belle, which will own 90 percent of Sinophil. Meanwhile, this lack of trading liquidity on the long-dormant Sinophil is something that the market expects to be resolved soon.  Doris C. Dumlao

SMC-MPIC tiff rages

Officials at San Miguel Corp. (SMC) are bristling at what they believe are potshots being taken at it by Metro Pacific Investment Corp. (MPIC) in the wake of the bidding for the Cavite-Laguna Expressway project.

MPIC had complained to the government that SMC’s bid bond was good for only 176 days instead of the 180-day period stipulated by the Department of Public Works and Highways (SMC’s bank, ANZ, has already written the government to say their backing of the conglomerate’s bid was good for 180 days).

But SMC insiders point out that this pattern of complaints and nitpicking is not uncommon behavior for its rival. Last year, MPIC asked the Department of Transportation and Communication (DOTC) to disqualify SMC from the Mactan airport bidding supposedly due to SMC’s “undue advantage.” MPIC alleged that SMC’s foreign partner had “insider” information and should therefore be disqualified. DOTC ignored MPIC’s complaint and allowed the bidding to proceed. (Neither SMC nor MPIC won the Mactan concession.)

Of course, SMC is now hoping that—like the DOTC last year—DPWH would ignore what it feels are “petty” complaints. (Another complaint stated that SMC’s bid boxes were “not properly arranged.”)

Whatever DPWH decides today, it must remember that the idea of bidding is to foster competition to generate the best returns for the state.  Daxim L. Lucas

Ackerman’s back

Stockbrokerage firm I. Ackerman & Co. Inc. (IACI) is back in the game.

Capital Markets Integrity Corp. (CMIC) president Cornelio Gison said IACI was now in “substantial conformity” to risk-based capital adequacy requirements. The suspension order on the company was lifted after eight trading days as the brokerage corrected a reporting deficiency.

The heirs of the late Irving Ackerman—a New Yorker who established a stockbrokerage firm in the Philippines shortly after World War II and was one of the founders of the old Makati Stock Exchange—were said to be still learning the ropes, but definitely would not let the founder’s legacy go down the drain.

Another brokerage suspended by CMIC in late May, Nieves Securities Inc., is still in limbo and is in a more complicated situation a few years after the entry of a new controlling investor from China.  Doris C. Dumlao

Not just the name

The SM group is chafing over repeated references to its contract with the Department of Transportation and Communications as one of only “naming rights” over the proposed MRT-LRT “common station” that would have been built at SM’s North Edsa mall.

Apparently, apart from naming rights, the 2009 deal also allowed the retail conglomerate interconnection to the rail station via a bridgeway from the mall. It was precisely for this that SM paid the government P200 million: Naming AND interconnection rights.

For the DOTC to comply with this deal, the new station would have to be located in front of SM North Edsa, or they would have to build an elevated walkway—possibly as long as two-thirds of a kilometer long—to connect the Trinoma station to SM’s mall.

Also, SM is hopping mad because “not once” did DOTC inform them formally about the planned relocation of the station to the Ayala-owned mall across from the street, the group says. SM sent several letters to DOTC chief Joseph Abaya and not a single one was answered.

So what does SM think about the DOTC’s proposal to simply return the P200 million it paid? It’s not an issue of the money being returned, SM said. “A contract is a contract, and obligations are reciprocal.” So for SM, if DOTC won’t listen to reason, maybe the courts will.  Daxim L. Lucas

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